Bottom line impact of healthcare in the billions

The healthcare industry’s impact on Mississippi’s economy is sizable, no matter what measure you use to quantify it, according to industry observers.

Employment? According to figures released in February by the Mississippi Hospital Association, the healthcare industry in 2001 accounted for 7.6% of Mississippi’s total employment numbers, providing jobs for 111,674 Mississippians. That’s more jobs than were generated in farming, construction or forestry — each of which once commanded a large share of the Mississippi workforce.

Payroll? In 2003, Mississippi’s 115 hospitals had a combined payroll of $2.375 billion, according to the MHA study. Hospitals with less than 25 beds had an average payroll of $3.4 million — no small amount in Mississippi’s rural communities — while hospitals with over 200 beds averaged payrolls of $67.5 million in the same period.

Healthcare spending? Mississippians spent over $9.5 billion in personal healthcare expenditures, amounting to $3,474 a person in 1998, according to the Kaiser Family Foundation.

Construction spending? Capital expenditures by Mississippi hospitals totaled $664 million in 2003 and $665 million in 2002, creating 6,101 construction jobs annually with payrolls of $192 million per year. And with a variety of expansion and construction projects approved by the Mississippi Board of Heath for 2004, such spending should continue to impact other sectors of the Mississippi economy.

Not surprising, say industry insiders

The employment numbers weren’t totally surprising to industry watchers, according to Shawn Lea, director of communications for the MHA.

“We knew that in some areas, such as Jackson and Meridian, that healthcare was a huge employer, and we understood that rural hospitals were often the biggest employers in the community,” said Lea of the report, compiled by Gerald Doeksen, regents professor at Oklahoma State University. “We just didn’t have any data.”

Hospitals have often been a primary source of jobs for rural communities in Mississippi, according to Mendal Kemp, director of MHA’s Center for Rural Health. “They are critical to the community,” Kemp said, citing their frequent status as the No. 1 or No. 2 employer in any given rural county.

Employment in the healthcare sector in Mississippi has grown faster than the national average, according to Bureau of Labor figures cited in the MHA report. From 1970 to 2000, healthcare employment in Mississippi grew by 360%, compared to a national average of 331%. In Mississippi, only 18,789 people were employed in healthcare in 1970; in 2000, that number had grown to 86,568.

Much of the employment in the healthcare industry is in the state’s metropolitan areas — metro Jackson in Central Mississippi, DeSoto and surrounding counties in North Mississippi, and the Mississippi Gulf Coast in the southern end of the state. Fifty-five percent of Mississippi’s healthcare workforce is concentrated in those areas, with the other 45% employed throughout the rest of the state.

The Jackson tri-county area is home to 15 hospitals — seven in Hinds, seven in Rankin and one in Madison. Mississippi’s three coastal counties have nine hospitals, while Lauderdale County stands out among Mississippi’s remaining rural/micropolitan areas with six hospitals.

Rural and urban

One surprising statistic is the equity of pay for healthcare workers between Mississippi’s metropolitan and rural areas.
Mississippi’s average healthcare worker earned $39,676 in 2003, with workers at hospitals with less than 50 beds earning $34,841 per year and workers at hospitals with 200-plus beds earning $39,960 per year. With hospitals with 25 beds or less still averaging 99 people on their payrolls, the earnings of healthcare workers can have a significant impact on a rural economy.

“The economic impact in the county is a lot more than anyone imagines,” said Kemp.

And although not all people employed in medical services in Mississippi work for hospitals, the presence of a hospital, particularly in a rural area, is often the beginning point for attracting healthcare workers such as doctors, pharmacists, home health aides and durable medical supplies dealers, Kemp pointed out.

Doctors are reluctant to go into areas that don’t have hospitals, particularly if the facility lacks an emergency room. The hospital often serves as a lab and ancillary services provider, and local nursing and personal care homes need a hospital nearby for residents who develop more serious health problems than they can handle.

“The hospital is the hub of the nervous system,” said Kemp.

Adding it all up

More than half of Mississippians’ personal healthcare expenditures go to services other than hospital care, according to figures from the Kaiser Family Foundation.

Doctors’ bills make up about a quarter of healthcare expenses for Mississippians, while drugs take up about 12% of the total spent by Mississippians on healthcare. Nursing home care is the next largest expenditure, totaling 7.3% of healthcare spending. Those dollars add to the secondary impact of healthcare spending on Mississippi’s economy, according to the MTA report. With total payroll from the operating activities of the healthcare sector coming in at $2.4 billion, the secondary income is estimated at $1.2 billion, excluding construction-generated dollars.

Much of Mississippi’s hospital facilities continue to age, with many buildings dating back to the 1940s, according to Kemp.

While rural hospitals struggle to find funds to make capital improvements, plans for expansion and upgrading of medical facilities are on the drawing board in a number of communities. The State Board of Health approved several building projects in July 2003 that should get underway within the next year:

• a 60-bed nursing home in Madison, managed by Southern Healthcare Services

• a 60-bed nursing facility at Tallahatchie General Hospital and Extended Care Facility in Charleston

• 48 new nursing home beds at Yalobusha General Hospital and Nursing Home in Water Valley.

A good example of how the spillover effects of a new hospital facility construction project can benefit a community are the figures projected for Greenville, which should begin phase one of the Delta Regional Medical Center’s (DRMC) $8.1 million building on their new 182-acre site on Highway 1.

The first phase will consist of an ambulatory surgical center and a medical office building, followed by a second phase leading to a comprehensive medical complex.
With a total anticipated investment by DRMC of $100 million, Greenville anticipates a projected 600 additional jobs and an extra $250 million in revenue to the region, according to figures from the Industrial Foundation of Washington County.

“Construction during 2004 will be one of our biggest construction years ever,” said Tommy Hart, executive director of the Industrial Foundation of Washington County.

Growth likely to continue

Demographic trends that include an aging population in the state will likely insure that healthcare remains a growth sector in Mississippi for the foreseeable future.

According to the Mississippi Department of Employment Security, six out of the 10 occupations most in demand in Mississippi are expected to be the healthcare field: home health aide, with an average salary of $18,000 per year; medical assistant, at $20,560 per year; personal and home care aides, at $14,840 per year; medical records clerk, at $21,380 per year, speech-language pathologist, at $43,230 per year; and dental hygienist, at $34,820 per year.

One office charged by the state to keep up with the demand for nursing needs across the state is the Office of Nursing Workforce (ONW), based in Jackson. Out of the 86 hospitals across the state that responded to their 2003 survey, most indicated a need for staff RN’s and medical/surgical RN’s most frequently — and those areas are the most likely places for new nursing hires to find jobs.

ONW’s figures show that hospitals expect an increase in the number of RN’s needed in several areas that likely can only be filled as nurses currently in the field gain clinical experience in the next few years — the demand for case management, quality improvement, inservice education and patient education RN’s is expected to increase by 5% to 10% over the next two years.

But if the teaching faculty at schools of nursing continues its current rate of attrition, as the ongoing nursing shortage may worsen. The shortage can be attributed to several factors, including the large percentage of the nursing workforce reaching retirement age and the lucrative salaries skilled nurses can command in clinical practice, according to Betty Dickson, ONW’s director

To that end, the Mississippi Development Authority and the Mississippi ONW held a Healthcare Workforce Summit in June to focus on how Mississippi’s nursing shortage may impact economic development in Mississippi.

Calling the summit a model for how agencies need to focus on the state’s growing healthcare needs, Gov. Haley Barbour said, “The top priority of my administration is job creation, and the healthcare field is one of the most important occupational clusters that needs our attention.”

It’s a sentiment echoed by Kemp in discussing how important healthcare resources are to a community. “If the hospital isn’t there, the people won’t be either.”

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